An owners corporation (previously called a body corporate) is created by plan of subdivision, typically where common property exists in a development. Typically, it manages the common property of a residential, commercial, retail, industrial or mixed-use development. If you own a unit, apartment or a flat, you are likely to be a member of an owners corporation.
When you buy into an owners corporation, you will be purchasing not only the individual property, but also ownership of, and the right to use, the common property as set out in the plan of subdivision. Lot owners in an owners corporation are required to make financial contributions to the owners corporation which will often levy fees to the lot owners on a regular basis.
Functions of an an owners corporation
According to the Owners Corporation Act 2006, the owners corporation has the following functions:
- To manage and administer the common property;
- To repair and maintain:
- the common property;
- the chattels, fixtures and services related to the common property or its enjoyment; and
- equipment and services for which an easement or right exists for the benefit of the land affected by the owners corporation or which are otherwise for the benefit of all or some of the land affected by the owners corporation.
- To take out, maintain and pay premiums on insurance required or permitted by any Act; and
- To provide owners corporation certificates when requested.
An owners corporation must act in good faith when carrying out its functions and powers. It has an obligation to provide information about the owners corporation financial situation and is required to keep records of its current situation.
Warning to purchasers
Purchasers of property which is part of an owners corporation should be conscious of the potential liabilities that might arise from the need to repair or replace infrastructure (especially aging infrastructure) and assets such as pipes and, in some case, roofing, staircases and elevators. The risk is, of course, greater with older developments. Careful consideration should also be given to the minutes of meeting and the rules of the owners corporation contained in the certificate (typically attached to the Section 32 Statement).
What is common property?
Common property can include car parking areas, gardens, hallways, stair cases as well as structures such as letter boxes, drains, and roofing. In more modern developments it can include car stackers and elevators.
The common property is owned by the various lot and unit owners in proportions as set out in the plan of subdivision. As such, it represents an asset that is held by these various owners. Conversely, such owners also share the liabilities that are attached to the common property.
What is an owners corporation certificate?
Any person may apply to the owners corporation for an owners corporation certificate. The certificate provides information relating to the owners corporation in relation to:
- Fees payable;
- Fees and charges that are imposed or proposed to the lot;
- Fees or money owing in respect to the lot;
- Insurance;
- Repairs and maintenance;
- Funds held by the owners corporation;
- Liabilities of the owners corporation;
- Any agreements relating to the common property;
- Services provided by the owners corporation;
- Any notices or orders served on the owners corporation;
- Legal proceedings to which the owners corporation is a party;
- The manager; and
- Any appointment of an administrator.
When receiving a certificate, you will also be provided with a copy of the rules of the owners corporation, a statement providing advice to the prospective purchaser as well as a copy of all resolutions made at the last annual general meeting of the owners corporation.
If you intend to sell your property and you are within an owners corporation, you must include an owners corporation certificate in the Section 32 statement. All owners corporations are required to prepare and supply an owners corporation certificate within ten business days to anyone who applies and pays the relevant fees.
Further information
More information about owners corporations can be found on the Consumer Affairs website.
Contact us
ASAP Lawyers regularly accepts instructions to advise purchasers and vendors about their property law and conveyancing matters. Contact us on 03 9450 9400 to speak with a professional property law expert.